Archive | Housing

The volume of new mortgages across Canada has been slowing down in recent months, amid rising interest rates and tougher federal regulations, a new Trans Union report shows. But the country’s oldest homeowners are bucking that trend – big time.

Among Canadians aged 73 to 93, the so-called silent generation or pre-war generation, the number of mortgages issued between January and March of 2018 was up a whopping 63 per cent compared to the same period last year, TransUnion data shows. Baby boomers are also getting new mortgages, although the increase in loan originations among Canada’s 54- to 72-year-olds is a more modest 18 per cent.

That stands in stark contrast with what’s happening with the country’s first-time homebuyers and younger generations in general. Mortgage originations were down 19 per cent among millennials (ages 24-38) and 22 per cent among gen-Z (18-23).

Overall, the number of new mortgages issued between January and March was down 3.4 per cent compared to the same period last year. This follows at eight per cent drop in the last three months of 2017 compared to the last three months of 2016. (New mortgages include brand new loans, loans renewed at a different lender and refinancing.)

Older generations could be re-mortgaging or borrowing against their home equity in order to “support retirement or to financially support younger generation family members,” the TransUnion report reads.

Research shows that retirement expenses tend to skyrocket around age 80, due to health care and long-term care costs.

But the pre-war generation is also joining forces with boomers to help the younger kin.

“We hear of parents and grandparents supporting their children and grandchildren, whether it’s student loans or buying a house,” Matt Fabian, director of financial services research and consulting for TransUnion Canada, told Global News.

That said, as large as the six-fold surge in new mortgages issued to Canada’s 70-to-90-year-olds may seem, the volume of mortgages in that age group remains very small, Fabian said. (The data does not include reverse mortgages, TransUnion said.)

Still, the numbers do suggest that the stricter mortgage rules introduced on Jan. 1 of this year are having a much bigger impact on newer generations.

“The stress-testing rules are about affordability,” Fabian said. Younger mortgage applicants may be either finding out that they don’t qualify or that they can’t get the amount and loan type they want, he added.

Older Canadians who have enjoyed remarkable home-equity gains in the last few years don’t have to worry about stricter standards on things like loan-to-value ratios, Fabian said.

The data also shows significant variations across cities. While new mortgages dropped by almost 18 per cent in Toronto, they remained virtually flat in Vancouver, with growth of less than one per cent in the first three months of 2018 compared to the previous year.

But new mortgage volumes rose in Ottawa (up 8.4 per cent) and Montreal (up 5.2 per cent), where relatively low real estate prices have been attracting an influx of buyers.

More credit cards and higher balances

Canadians may be having a harder time getting a mortgage, but they aren’t giving up their credit cards.

TransUnion reported a “surge” in the number of credit cards issued in the first three months of 2018, which was up 5.6 per cent year-over-year across all age groups.

“This represents a dramatic shift compared to an approximate 10 per cent decline year-over-year from [the first quarter of] 2016 to [the first quarter of] 2017,” the report said.

The average consumer now carries a balance of $4,200, the data shows. Collectively, Canadians now owe $99 billion through their credit cards.

Total non-mortgage debt still rising, although at a slower rate

Overall, the average Canadian had almost $29,650 in debt excluding mortgages in the period between April and June, an increase of almost four per cent compared to the same three months in 2017, TransUnion said.

“This is the third consecutive quarter where the quarterly change is less than the change seen in the previous year,” the report noted.

In other words, Canadians continue to borrow more, but at least the pace at which they’re piling on debt has slowed.

More than 1.4 million Canadians between the ages of 54 and 72 expect to buy a house in the next five years, according to a new survey by real estate powerhouse Royal LePage.

Boomers will be either downsizing to smaller properties in their hometowns or looking for greener — and cheaper — pastures away from big cities, the research shows.

Either way, this is “expected to have a meaningful impact on the housing market,” the report reads.

Canada’s housing market has already been through a boom, bust and echo, said Royal LePage president and CEO Phil Soper, quoting the 1990s bestselling book Boom, Bust and Echo by Canadian demographer David Foot.

The boom happened when boomers entered the market as first-time homeowners and then upgraded to larger homes a few years later. The bust had, in part, to do with the smaller number of gen-X homebuyers. The echo kicked in when millennials, the children of the boomers, started looking for a home of their own, Soper said.

Now we may be in another real estate market commotion caused by boomers, as Canadians in or approaching retirement look for homes better suited to life after work.

Less pressure on detached-home prices, more pressure on condo prices

In terms of home prices, “I think that there will be some relief from boomers leaving family-sized homes,” Soper said.

The main beneficiaries will likely be first-time homebuyers who are at the tail end of the millennial cohort and the much smaller generation Z. Downsizing boomers will also likely leave more space for older millennials who already own a house but are a looking to move to a bigger home as their families grow.

Still, with demand for housing expected to remain, the boomer migration to condos and small-town Canada won’t be the solution to housing affordability woes, Soper warned.

“It will bring some relief, but not enough for (home) prices to retract,” he said.

And when it comes to smaller homes and condos, downsizing boomers often become competition for young families and immigrants, helping to push prices up.

“The price appreciation curves for condos and detached homes in places like Toronto have flipped over the last couple of years,” Soper said, meaning that apartment units have been appreciating faster than single-family houses.

In particular, boomers could push up the prices of larger condos, Soper added.

This would add to price pressures generated by the stricter federal mortgage rules that came into effect this year. These rules also contributed to pushing more homebuyers toward less expensive properties like condos.

Smaller towns

But not all boomers are prepared to spend their golden years in an apartment.

A whopping 56 per cent of those surveyed consider their local housing market unaffordable, a percentage that grows to 63 per cent in Ontario and 78 per cent in British Columbia. However, the solution for many isn’t to stay put and downsize but to move away.

“Our research does indicate that smaller cities and recreational areas will attract more investment than major cities,” Soper said in a statement.

But boomers are likely to postpone their home purchases until the family nest is empty. The survey found that 44 per cent of respondents still have children living with them. Of those, almost 20 per cent don’t anticipate the kids will move out until after the age of 30, while nearly 10 per cent expect them to leave after the age of 35.

Perhaps partly in an effort to make that transition happen, 47 per cent of boomers say they are ready to help their children buy their first home, with 5 per cent willing to contribute 25 per cent or more of the home purchase price.

Baby boomers are the “most affluent generation in Canadian history” and they are willing to give back, Soper noted.

“This is a generation that deeply values home ownership and very much wants their children to have the same opportunity.”

Leger conducted an online poll of 1,000 Canadian baby boomers between the ages of 54-72 between July 12 and July 17, 2018. The survey has a margin of error of +/-3.0 per cent, or 19 times out of 20.

Downtown Toronto properties are attracting multiple offers, while realtors in the wider GTA see signs of the market heating up.

“Sizzling” might be overstating the warming property market. But the real estate industry is finally predicting a return to a traditionally brisk spring — the kind of season that was virtually lost last year when, after months of bully bids and frenzied buying, sales soared in March and then stopped almost overnight.

Oakville broker Tracy Nursall says it’s been longer than a single aberrant year since the Toronto Region experienced a typical spring market. This year is more similar to 2013 or 2014 than any season since, she said. There was a long run-up to last March’s historical peak of a 34 per cent year-over-year price increase. The exceptional activity dates back to 2015, she said.

“Everybody’s taking 2017 out of the numbers, they should take 2016 out of the picture as well,” said Nursall of Sage Real Estate, who says the market west of the City of Toronto is still coming out of hibernation. But she expects sales to heat up with the later spring weather.

Downtown agents tell a different story. They say that the right properties in desirable neighbourhoods are attracting multiple offers, while still allowing room for negotiation.

Even in Durham Region — traditionally an island of affordability in the Toronto area — prices are rising and properties are moving faster than they were at the beginning of the year, said Dennis Roberts, president of the Durham Region Association of Realtors.

“There’s a lot of demand for homes even if people’s capacity (to buy) has been diminished,” said Phil Soper, CEO of Royal LePage.

He acknowledges the cumulative effects of the mortgage stress tests enforced by Canada’s bank regulator in January, rising interest rates and the market deflation that followed Ontario’s foreign buyers’ tax last April. But he says would-be buyers are still optimistic they will be able to afford a home even if they have to wait a while, he said.

“This spring people want to talk and they want to understand. Some of them can’t afford what they feel they need or they can’t pass the test to get financing but they still want to talk,” he said. That’s a different scenario than Vancouver in 2016, when people wouldn’t even speak to agents.Even if the volume of transactions remains relatively low in the Toronto area, demand is building, said Soper.

Young people who haven’t been able to move out of their parents’ house are reaching the stage of life where they are going to buy houses and Canadians from outside Ontario are still flocking to the Toronto area’s job opportunities, he said.

“There were 25,000 new Ontarians, and most of them in the Greater Toronto Area last year based on people moving from other parts of the country. That is sharply up from what it was two years ago,” said Soper.

But macroeconomic factors will weigh heavily on the Canadian housing industry, he warns.

“What looks to be a very bright future could dim rapidly if a few things go wrong in trade, in mega-projects, even a sharp turn to protectionism or anti-immigration sentiment in Canada at the provincial level,” said Soper.

John Pasalis, president of Toronto real estate brokerage Realosophy, says he’s not expecting “crazy gains” this spring. But if prices stay where they are, by July or August, prices could hold steady or even rise slightly year over year by the end of 2018.

“The market’s going to do a little bit better than most people are expecting,” said Pasalis.

There is still only about two months’ housing inventory in the region, he said. That level would be rising to four or five months if sales and prices were going to slow further. That’s what happened last spring.

“While it’s slow in Richmond Hill, that means it’s really competitive in other parts. As a whole it’s pretty balanced right now,” said Pasalis.

Even the 905 communities that were hardest hit when the market deflated last April and May, are starting to improve, he said.

“Downtown is still insane. There’s no slowdown,” said Pasalis and that extends to central neighbourhoods such as Leslieville, Wallace Emerson and Dufferin Grove where buyers are competing for property.

Pasalis’s comments come a week after the Toronto Real Estate Board (TREB) reported a 14 per cent year-over-year drop in the average home price in March and a 40 per cent plunge in home sales. But month-to-month figures showed some warming, with last month’s prices 2 per cent higher than February’s and the third month-to-month rise.

“First-time home buyers — with the new rules — are really challenged to get into the market,” said Chris Alexander, regional director at Re/Max Integra.

Re/Max 2018 Spring Market Trends report predicts prices will fall around the GTA in comparison to last year. It predicts year-over-year declines between April and June from -2.5 per cent in Mississauga; -4 per cent in Brampton and -5 per cent in Toronto, to -15 per cent in Durham Region and -10 per cent in Oakville.

But the 2017 comparator is especially suspect given the unique circumstances of last spring and Alexander is predicting that by year’s end, average home prices for 2018 will end up around where they began this year.

“(Buyers) will show up for the good properties,” he said.

“Sellers are going to have to come down to reality and understand this isn’t 2016 or the first part of 2017,” said Alexander.

“There are certain neighbourhoods in Toronto that have performed very well despite government intervention and the cooling markets around them,” he said, mentioning Etobicoke, Rosedale and Yorkville.

But Markham and Richmond Hill will still see softening, he predicted.

Breaking down the market

How much heat buyers and sellers experience this spring will depend on the kind of property and the area in which they are trading.

Downtown

If there’s a heat island in the GTA, it’s downtown where properties are routinely getting snapped up, says Desmond Brown of Royal LePage.

Brown reports that the take-no-prisoners atmosphere of 2016 and early 2017 has mellowed. Even in competing bid situations, the selling price for houses tends not to be a crazy amount over asking and there’s frequently room to negotiate.

A buyer on one property that had multiple bids had a successful offer that included a home inspection, he says. Financing conditions can also be written into offers.

Still, he advises, if you’re buying, “You’ve got to do your best to have the cleanest offer possible.” That can mean arranging a home inspection before the offer date or asking for one the seller has done in advance. Buyers should also make sure their financing is pre-approved, he says.

It’s a real estate cliche, but it really is all about location and that’s truer than it was during the peak, says Brown.

“Last year, where we were seeing things selling in just about any location, this year buyers are a lot more discerning,” he says. They will pay attention to the condition of neighbouring homes, and properties on main streets will take longer to move.

“A lot of young people in financial services and the tech industry have the money to spend. They want to be within walking distance for work or a short transit ride and they’re still paying top bucks,” says Brown.

The $1-million price that would be a psychological barrier doesn’t apply to the hot downtown market, says John Pasalis, president of Leslieville brokerage Realosophy.

“Prices of $1.3 million, $1.5 million — those are still competitive down here — if you’re on the subway line,” he says. “It’s when you get north of $2 million that it starts getting slower.”

The 905

The pain of the real estate bubble lingers in the communities outside Toronto, particularly in areas like York Region where speculation played a big role in driving up the market before last April, says Realosophy’s Pasalis. Overall, he’s expecting a balanced market, but the farther from the core you are, the more inventory there is, he says.

In Durham Region, one of the most affordable areas of the GTA, the average price rose to $598,000 from $578,000 between January and March, says Dennis Roberts, president of the local real estate association. The average number of days on the market has dropped from about 30 to 18 during the same period. The extension of Highway 407 and expanded GO train service are raising Durham’s value because commuters to Toronto have alternatives to sitting in congestion on Highway 401.

Lower-priced properties are moving more quickly than bigger houses, but the empty nesters living in those have fewer options in Durham where condo development has lagged other areas of the GTA, he says.

“They really don’t have many options of where to go. So we need to get a bigger choice for them. We need more supply for that bungalow-condo market, larger condos. They don’t want to go down to 800 sq. ft.,” says Roberts.

Mississauga and Oakville are starting to climb back out of the January doldrums, but the heat generated in downtown always takes a while to work its way west in the Toronto region, says Tracy Nursall of Sage Real Estate.

“We’re just heading into spring now where Toronto’s already in spring market,” she says. “April is coming out of the gate a little faster, but it’s not bolting out of the gate.”

Increasingly, buyers in 905 communities are looking for the same kind of destination neighbourhoods that make downtown Toronto attractive, says Nursall. They will be quick to pounce on the new neighbourhoods being built around Port Credit in Mississauga, she says.

“Hamilton’s taking a lot of eyeballs because they’ve got a great culture and foodie scene,” says Nursall.

Condos

Condos are the housing market that uniformly evoke superlatives and challenge buyers. It’s not unusual for a downtown condo to draw 10 to 15 offers, says Christopher Alexander of Re/Max.

Multiple offers and over-asking prices are the norm. But, he says, supply is an issue as condo owners struggle to make their next move.

“It’s very difficult for buyers to afford a house in the city,” he says.

Downtown condos also offer a lifestyle their owners value, says Harrild. He says he recently met with a couple who were considering listing their downtown loft, but they were struggling with whether they could stand to live farther than a two-minute walk to the stores and restaurants they enjoy.

“If you want that patch of grass are you willing to sacrifice on location to get it,” he says.

Royal LePage’s Brown calls the condo market “completely nutty on everything under the $700,000 range.”

Once the price approaches about $800,000, condos start to look expensive. Add in maintenance fees and the cost resembles a $1.1 million house, he says.

Brown cites a condo in Regent Park that was listed for $455,000. He figured it might be worth up to $550,000. It sold for about $600,000 after atttracting 13 offers.

Home buyer behaviours

56%

Ontarians who feel they can afford to buy a home that suits their family’s needs.

53%

Ontarians who put access to parks and green spaces as their top home-buying consideration, compared to 50%, who put proximity to work as their chief concern, followed by access to stores (45%) and nearby public transit (36%)

29%

Ontarians who had to compromise on the size of home and their budget because of government regulations.

A group of buyers in Mattamy Homes’ Preserve development say provincial measures to cool the Toronto-area housing market have placed them in financial peril. But Queen’s Park offered no assistance on Thursday.

Ontario Housing Minister Peter Milczyn says he doesn’t know how many homebuyers have been financially imperilled by the plunge in the Toronto real estate market following the introduction of the foreign buyers tax last April.

“I’m not aware this is a massive problem,” he said on Thursday.

Milczyn, who wasn’t in the housing portfolio at the time, said Queen’s Park would have done a broad analysis of the potential fallout from the tax, part of its Fair Housing Plan, which succeeded in cooling the region’s white-hot housing market.

“But as far as I know, (the government) didn’t drill down into calculating a number of individuals who might be impacted,” he said.

Milczyn was among those who expressed sympathy but offered no assistance Thursday to a group of Oakville homebuyers who say they are part of a much larger cohort of purchasers, caught during an extraordinary real estate cycle. They say they are on the brink of not being able to close on their pre-construction home purchases and fear they will be forced to forfeit hundreds of thousands of dollars in deposits.

They also worry that if they don’t close, they will be sued by the builder.

The buyers say the drop in the region’s real estate sales devalued their existing homes far below what they expected when they bought in Mattamy Homes’ Preserve development in February 2017. There are at least 100 other buyers suffering similar distress, said three couples who were interviewed by the Star.

In addition to declining property values, their dilemma has been compounded by new mortgage stress tests that took effect nationally in January, qualifying them for smaller loans than they would have been able to access a year ago.

“We’re looking for some sort of solution to help us out, however creative that can be … We’re open to anything that can really help us in our situation. We’re not looking for a handout,” said buyer Claudia Evans.

Some houses in Mattamy’s Preserve sold for more than $2 million. The buyers who spoke to the Star paid between $1.2 million and $1.6 million, sums that were about the same as the prices they expected to get for the homes they already owned. The three couples all said they planned to live in their new homes with their young children.

The average price of a new-construction Toronto-area detached home in February 2018 was $1.22 million. A year earlier it was about $1.5 million.

On Thursday, politicians and builders said that the buyers should have known they were at risk when they signed contracts with a builder.

“The government is not here as a backstop for real estate transactions gone bad,” said Milczyn.

The foreign buyers tax was introduced because there was a sense that people from outside Ontario and Canada were bidding up the price of homes, shutting Toronto-area buyers out of the market, he said. The 15 per cent non-resident speculation tax has reduced the number of offshore transactions in the province.

“To me that means the policy was successful in giving more Ontarians a fair shot at buying a home,” said Milczyn.

In the month after the tax was introduced, government data showed less than 5 per cent of real estate deals in the Toronto and Golden Horseshoe area involved foreign buyers. That’s about the same number the Toronto Real Estate Board reported prior to the tax’s introduction.

Building Industry and Land Development Association president Dave Wilkes, who represents homebuilders, said developers are also subject to economic forces, government regulation and demand, but the businesses have to meet their commitments.

“The industry is sympathetic to the hardships changing conditions will place some new homebuyers in,” he said. “The housing industry is a cyclical one. When you buy a new home that is going to be completed several months down the road, unfortunately situations can change, whether that’s the value of the current house that you have, if you are indeed looking to sell, employment conditions — there’s all those types of things that can happen.”

Oakville Mayor Rob Burton has written to Mattamy on behalf of the buyers, asking if the company can offer some concessions that it has allowed in other developments.

“What (the buyers) are saying is they’re looking at all of their hopes and dreams being dashed and it’s got to be a very tough place to be for people,” he said.

But it’s not the government’s problem. “This is a private matter,” Burton told the Star.

In Mattamy’s Queen’s Common community in Whitby, where the builder dropped its prices following the decline in real estate sales, buyers were allowed to increase their deposits to reduce the price of the house by an equal amount.

Asked if that was a possibility for Oakville, Mattamy said the company deals with individual communities differently.

“We’ve decided going forward that the best approach continues to be dealing with customers on a one-to-one basis, which is the same way that they bought from us,” said Brent Carey, vice-president of communications for Mattamy.

“If we can assist our buyers within the contractual boundaries that we both signed on for, we explore that with them individually. We have been and will continue to be willing to meet and work with our customers one on one, within the boundaries of the agreement, in an effort to where possible provide individual solutions.”

RBC reported on Thursday that Canada’s overall housing affordability improved in the fourth quarter of 2017 for the first time in more than two years, mostly as a result of the slow Toronto market. But it cautioned against popping champagne corks, “unless you think allocating 75.1 per cent of a household’s income to cover ownership costs is acceptable.”

“That’s what a typical Toronto-area household would need to allocate if it were to buy an average home at today’s prices and interest rates,” said the bank report.

The reprieve is likely to be short-lived because the Bank of Canada will hike its rate again before the first half of 2019, said RBC.

QUEEN’S PARK – During question period Wednesday, NDP MPP Armstrong called on the Wynne government to demonstrate care for Ontario seniors, and their support workers, by committing to a standard four hours of care per day for each long-term care resident.

Armstrong, the NDP’s critic for Long-Term Care and Seniors’ Affairs, recently met with 36 Personal Support Workers (PSWs) from UNIFOR Local 302 who told her about the myriad of challenges they face, including daily verbal abuse and routine physical abuse working in long-term care.

“One PSW described giving a bath to a resident with dementia. He head-butted her, leaving her with facial bruises and a split lip. Staff are advised that violence comes with the job. If they report the verbal abuse they are asked what they did to cause it,” recounted Armstrong, MPP for London-Fanshawe.

“Workers are doing their very best, but when they only have 17 minutes per shift for each resident they just can’t do it.

“The Liberals have called their Throne Speech a ‘Plan for Care and Opportunity’.

“Will the acting premier commit to planning time to provide that care and implement the minimum standard of four hours per day for each long-term care resident and pass the Time to Care Act?”

During Armstrong’s meeting with PSWs, she said that Nancy McMurphy, UNIFOR Local 302 President, told her that despite having a shortage of PSWs in the province, programs to train new PSWs are being cancelled for lack of registration. Existing staff quit or take mental health leave because they are exhausted and demoralized by their working conditions.

Armstrong called on Kathleen Wynne to take a six-minute PSW challenge.

“PSWs want to do their best. They want to have enough time to get everyone ready for breakfast in the mornings, but they can’t do it in six minutes per resident,” said Armstrong

“The premier said that she is ‘proposing that we make big changes in the way we support care for each other.’ Nice words. Does the premier actually believe that a PSW can get someone ready for breakfast in just six minutes?

“And if she does, will this premier take the six-minute challenge and post her photo after six minutes in the morning to Facebook?”

Building industry pledges to put affordable housing supply on this year’s election agenda.

The search won’t get any easier this year for house hunters looking for an affordable, new construction, single-family home, says the association representing home builders.

The supply shortage that helped drive up the average price of a newly built, single-family home 23 per cent year-over-year in December, to $1.23 million, will continue, said Dave Wilkes, who took over this month as CEO of the Building and Land Development Association (BILD).

The market will continue to tilt to condos, which dominated sales and saw a 41.3 per cent price rise in December to $716,772, compared to the same month the year before, when they cost $507,128 on average, he said.

The number of single-family homes sold last year, 7,714 — including detached, semi-detached and town houses — was down 58 per cent from 2016 and 50 per cent from the 10-year average, according to BILD statistics.

The 36,429 condos that sold, however, marked a steep rise of 66 per cent above the 10-year average — 25 per cent more sales than 2016.

Wilkes said that BILD plans to make the issue of housing affordability prominent in the provincial and municipal elections this year.

“We need to ensure we have the right kinds of homes and we have the right policies to allow the supply to come on the market. We need to ensure we are doing the right things to ensure the products that are being built are affordable,” he said.

Newly built condo sales were also down dramatically in December — 844, compared to 2,276 last December, a 10-year record.

Wilkes blamed much of the shortage of new homes on the market on outdated municipal zoning bylaws that fail to support the province’s anti-sprawl land use policies.

Municipalities are mandated to update zoning but the province doesn’t enforce those rules, delaying construction as developers appeal the restrictions around the types of buildings they can put on that land, he said.

“We are in a period of change in the GTA. It’s a very exciting time, but we’ve got to get the policies aligned to make sure the approval processes accommodate the growth we’re demanding,” said Wilkes. “We’ve got to make sure we’re providing options for people and responding to the demand.”

He said BILD will be calling on governments to commit to streamlining the building approvals process; updating zoning across the region to support intensification. It also wants a public education campaign explaining its intensification policies.

The supply issues on the new construction front continues to influence the re-sale market, said the president of the Toronto Real Estate Board (TREB) on Monday.

The fact that re-sale condo demand remains strong despite 9.8 per cent more listings in the fourth quarter of last year, “points to the fact that we still do have a supply problem in the GTA that needs to be addressed to ensure the long-term sustainability of the marketplace,” said Tim Syrianos in a news release.

The average price of a re-sale condo in the fourth quarter rose about 18 per cent year over year to $515,816, TREB reported.

High rises account for most new construction sales in October, but prices are also rising.

The boom in condos and stacked townhomes pushed sales of new construction homes in the Toronto region up 18 per cent year over in year in October — accounting for 91 per cent of the overall 5,377 purchases.

The remaining 9 per cent of sales were low-rise, single-family homes, including detached, semi-detached and town houses.

A 70 per cent decline in the number of transactions in the low-rise category in October, compared to the same month last year, was accompanied by a 30 per cent increase in prices that averaged about $1.22 million.

New construction detached houses now cost $1.55 million on average, according to the homebuilders’ group Building and Land Development Association (BILD).

At the same time, condo sales climbed 70 per cent with a 40 per cent year-over-year price increase to $677,456 on average.

That translates to an average price per square foot of $791 with the size of condos averaging 857 sq. ft.

The sales and price trends are a reflection of the declining choice for home buyers, according to BILD.

“We’re still not building enough homes for the demographic reality of the Greater Toronto Area. Housing choice has diminished so markedly over the last 18 months to two years, even in the high rise market, prices are continuing to go up,” said CEO Bryan Tuckey.

The supply of homes available to buy at the end of the month remains at about a three- to four-month inventory level. A healthy new home market requires about nine to 12 months, he said.

When low-rise home prices started climbing between 2010 and 2015, the high-rise market provided a relief valve — homes that were still affordable to first-time buyers, he said.

Now, said Tuckey, “there’s really no relief valve into another housing type.”

The situation requires urgent action to bolster supply, said Tuckey.

“The new home market is reacting differently than the re-sale market. Let’s get more on to the market as quickly as possible. The demand side is not solving the problem,” he said.

BILD has long cited the increase in development approval timelines as a major factor in inhibiting the construction on new housing.

Across Canada, RBC’s housing affordability measure hit 46.7 per cent in the latest quarter, a level not seen since 1990.

Housing affordability in Canada hit the worst level in 27 years in the second quarter of this year, according to a Royal Bank of Canada report.

RBC Economics said in a report Friday that its housing affordability measure for Canada deteriorated for the eighth consecutive quarter. The Toronto area was the hardest hit, where RBC says affordability declined the most compared to the previous year and hit the worst level ever measured in the city.

The Ontario government’s actions in April to cool down the housing market, including a foreign buyer’s tax, did not have an immediate impact on provincial housing prices in the second quarter, RBC said.

“Clearly, home ownership remains out of reach for many would-be buyers in the area,” RBC Economics said in the report.

“The good news is that some relief is on the way. Recent downward pressure on prices is poised to lower ownership costs in the period ahead. The bad news, unfortunately, is that rising interest rates will take some of that relief away.”

Still, the least-affordable place to purchase a home remains the Vancouver area, where affordability worsened after two consecutive quarters of improvement but remains better than a year ago. Outside of British Columbia and Ontario, affordability remains mostly stable, RBC said.

RBC’s housing affordability measure shows the proportion of median pre-tax household income required to service the costs of owning the average home — factoring in both condos and single-family detached homes — including mortgage payments, property taxes and utilities.

The Vancouver area was the least affordable in the latest quarter ended June 30, 2017 at 80.7 per cent, down 2.4 per cent year-on-year. The Toronto area was second-highest at 75.4 per cent, marking an increase of 12.7 per cent.

Victoria came in third at 58.6 per cent, with a year-on-year increase of 7.3 per cent. Across Canada, RBC’s housing affordability measure hit 46.7 per cent in the latest quarter, a level not seen since the end of 1990 and an increase of 3.7 per cent from a year earlier.

Many Prairie markets got some relief, with year-on-year decreases in Regina and Saskatoon to 28.7 per cent and 32.1 per cent, respectively, RBC said. Affordability deteriorated marginally in most of Quebec and the Atlantic region. In Quebec City, RBC’s metric improved slightly to 34 per cent. In the Montreal area, it worsened by 0.8 points to 41.5 per cent. In Saint John, N.B., and Halifax, RBC’s affordability measure worsened to 24.5 per cent and 32.1 per cent, respectively, while it improved slightly to 27.7 in St. John’s, N.L.

Affordability in Edmonton worsened slightly year-on-year to hit 30.3 per cent. In Calgary, however, affordability deteriorated by 1.5 per cent year-on-year to 39.2 per cent.

Royal LePage predicts a soft market for the balance of 2017 to balance the strong performance in the first half.

One of the country’s biggest real estate companies is predicting an 18.5 per cent year-end price increase in the Toronto housing market this year, compared to a 13.8 per cent national year-over-year rise.

Given the significant gains of the first half of 2017, the company expects a year-end home price average of $862,264, up from $837,232 at the end of the second quarter.

Despite double-digit year-over-year increases in the second quarter, the company’s mid-year report notes that buyers have been standoffish since the province introduced its fair housing tax on April 20.

CEO Phil Soper said he expects home prices will be soft for the balance of 2017.

“We are experiencing a housing correction in the GTA, no doubt about it,” he said.

But that is different from the price correction that occurred in Vancouver when a similar tax was launched there last summer.

The 9 per cent of foreign buyer activity in Richmond Hill, compares to about 18 per cent in Richmond, B.C. The B.C. city is a smaller market and prices were about 50 per cent higher, he said.

“Almost half of the (Vancouver) market disappeared overnight,” said Soper. “I believe what we’ll see (in Toronto) is modest price increases but fewer homes being sold — not as a violent as the Vancouver correction where we saw 40 to 50 per cent of the transactions disappear.”

The Royal LePage forecast is slightly more optimistic than the Toronto Real Estate Board’s (TREB) revised expectation of a year-end 13- to 18-per-cent increase.

The report predicts that consumers, who have been waiting to see if sellers drop their prices substantially, will re-enter the market once they recognize that isn’t going to happen.

Second quarter home prices rose 22.8 per cent year-over-year in the city of Toronto with Scarborough showing a 21.1 per cent increase as millennials moved east in search of affordability.

For that reason, that part of the city is not expected to slow as much as other areas in the coming months, said Royal Lepage.

Vaughan saw the highest price gains in Canada during the quarter with a 27.5 per cent year-over-year increase and an average $1.1 million home price.

Richmond Hill, which also grew by 26.6 per cent year-over-year to an average $1.34 million has been hard hit by the foreign buyers tax, notes the report.

Given that Toronto and Vancouver are both growing with strong economies, it’s not clear how long the foreign buyers tax and other measures will quell demand for housing, said Soper.

“Like public transit, housing policy is something which needs a persistent, long-term focus,” he said.

Ipsos research for the Toronto Real Estate Board showed that in May, first time purchasers comprised only 40 per cent of those who plan to buy a home this year. That is down from 53 per cent in a November survey.

First-time home buyers appear to be delaying their purchases in the wake of the province’s new policies intended to cool the housing market.

At the same time, consumers buying new construction homes are overwhelmingly opting for lower-priced condo apartments and stacked townhouses.

Two reports released separately Friday by the Toronto Real Estate Board (TREB) and the Building and Land Development Association (BILD) suggest that first-time buyers are sitting back and waiting to see what happens in the cooling re-sale housing market.

But among those purchasing new construction, condos are the starter homes of choice.

High-rise and mid-rise apartments and stacked townhouses represented 86 per cent of new-construction home sales in the region in May, as the cost of a new townhouse crossed the $1 million mark for the first time, according to BILD.

Condos comprised 75 per cent of new-construction home sales this year to date.

Unlike the re-sale market, which has seen an influx of listings over the last two months, the supply of newly built homes remains constricted, especially in the single-family home category, said BILD CEO Bryan Tuckey in a press release.

“The price acceleration in the condo portion of the market is especially worrisome since it not only represents the lion’s share of new housing in the GTA, it’s also making it difficult for condos to remain the affordable option,” he said.

The average price of a new single-family home rose about $10,000 to $1.2 million in May from April — a 40 per cent gain over last year. Condos averaged $604,683 last month, a $30,000 increase over April and a 33 per cent rise compared to the same period last year.

Ipsos research for TREB, conducted in May, showed that first-time buyers comprised only 40 per cent of those who plan to buy a home this year — down from 53 per cent in a November survey.

The findings come as TREB prepares to update its 2017 market forecast on July 6.

TREB had been predicting that this year, a seller’s market would continue in the re-sale home sector, with prices rising between 10 and 16 per cent over last year.

But double-digit price growth in the first four months of the year — March prices rose 33 per cent year over year — has been cooling since just before the government’s Fair Housing Policy announcement on April 20.

With a 15 per cent foreign buyers’ tax as its centre, the policy was aimed at non-resident speculators.

While it’s unclear whether those buyers have been discouraged, TREB says the new policy had contributed to the decision of 10 per cent of buyers who say they won’t purchase this year.

“It makes sense that some first-time buyers have decided to at least temporarily put their decision to purchase on hold. First-time buyers are more flexible, and can take a wait-and-see approach. They could also re-enter the market quickly once they make the decision to purchase,” said TREB director of market analysis Jason Mercer in a press release.

Home prices were still about 6 per cent higher in the first half of June over the same period last year, according to TREB’s mid-month sales update. But realtors expect that the board’s official month-end report will show a second consecutive month-to-month price drop.

TREB’s newest consumer survey on May 23 to 29 showed 30 per cent of Toronto-area households are at least somewhat likely to list their house in the next year.

Fifteen per cent cited the Fair Housing plan as the primary reason they would put their home on the market.

Of those who said they would be selling, 80 per cent expected to buy another home.

“That means that these households are not exiting the home ownership market, but instead, changing the type or location of the home they will own,” said Mercer.

The 35 per cent of households that indicated they were likely or very likely to buy a home in the coming year was similar to the fall survey findings, said TREB.